4/18/1998 @ 12:00AM

Back to the future: the MiniDisc

For all our fascination with high tech gadgetry, Americans are slow to adapt new technology–particularly when it comes to music. It took us years to switch from LPs to cassettes. CDs were an even more difficult transition, but, of course, with time we grew to love them.

The problem is that in making the move from one technology to the next, we encounter the disadvantages of planned obsolescence: What happens to the record collection we spent so long lovingly building up? Or to the hundreds of cassettes we now have? When the next big thing comes along we have to make the painful decision to stubbornly ignore the latest advances in science or remake our entire listening library in order to stay au courant. If you want to be hip, you’ve got to stay hip.

Well, just when you thought CDs were the last word in hip audio technology, Sony has decided to bombard us with the MiniDisc–again. Half a decade ago Sony introduced the MiniDisc (Philips introduced a competing product called the Digital Compact Cassette) to much critical fanfare. Both were hailed as the next big thing but crashed and burned commercially. Americans simply didnt want to buy them. We had just accepted CDs for crying out loud and now they wanted us to switch again? Take a hike, pal.

Although DCC wound up on the scrapheap, the MD wouldnt stay down. It was too good a product. As the name implies, it is a small disc, almost one-half the size of a compact disc. Unlike CDs, MDs allow listeners to both play and record their favorite tunes without having to buy expensive recording equipment. Most important, it offers CD quality sound. Whats not to like?

For one thing, the price. When they were initially introduced, MD-players cost a lot–$500 or more, as opposed to $250 for a CD-player. Furthermore, the music industry wasnt marketing MD-formatted discs. If you wanted to hear the Stone Temple Pilots or Brahms, you had to buy a CD and then record it onto a MD disc. Granted, some people had the time to do this, like college students and professional disc jockeys, but for anyone else it was a drag.

Despite its flameout in the States, the MD took off overseas, particularly in Japan, Asia and Europe. Encouraged by this success, Sony decided to relaunch the MD. In 1998 the Japanese electronics giant will introduce ten new models

. Several other well-known companies are also jumping on the MiniDisc bandwagon: Denon, Kenwood, JVC, Sharp, Aiwa and Sanyo are all beefing up their MD offerings, and Pioneer and Yamaha will roll out their first home recording units later this year.

The problem is how to get Americans to care. Having seen that appealing to our inherent love of technology backfired, Sony has decided to get our attention a different way: Hire a supermodel and put her in a tight dress.

Make mine MD

On Feb. 5, 1998, the company launched a campaign, entitled “Make it with MD,” which features Claudia Schiffer, Dennis Rodman, Jon Lovitz and other celebrities as they move through a Hollywood party sporting a small MiniDisc personal stereo unit playing their own personalized music mixes. In addition, Sony is launching a series of MiniDisc print ads that include such hip celebrities as musician Max Weinberg–from Late Night with Conan OBrien–and model Tyra Banks. Its a pretty vapid ad campaign but Sonys implied message is clear: If you want to be cool, you have to own a MD.

Sonys also making the noises of a company that is prepared to stick it out. “We believe sales of the MiniDisc will greatly accelerate in the U.S. market during 1998,” says Mark Viken, Sonys senior vice president of Personal Audio/Video Products Group. The company projects that total U.S. industry sales for MiniDisc hardware will exceed 500,000 units–more than double what was achieved last year. MiniDisc sales in the U.S. are projected to increase more than fivefold to 5% household penetration by the year 2000.

These kinds of figures support the estimated more than $30 million that Sony has spent on promoting the MD–more than on any other audio product, according to Viken. To put it in perspective, thats 10% of what the entire audio/video industry spent on advertising in 1997.

Sony might not even have a choice, as with every passing year, the window of opportunity for MiniDisc diminishes. The format is facing increasing pressure from newer technologies like Digital Versatile Disc (DVD) and the emergence of the read-write CD recorders.

To this Sony’s Viken counters: DVD is still quite distant in the future and is more expensive. “DVD is going to be primarily a home video-type device,” he says. Nevertheless, Philips, one of the co-inventors of the Compact Disc format (Sony is the other), has recently introduced a home-audio version of the CD recorder that will retail for $599.

Viken points out that the MiniDisc is not meant to replace the Compact Disc, but that instead it is the aging cassette tape which is in MiniDiscs crosshairs. Anyway, he adds, it is easier to record a MiniDisc than a CD, and you can record as many times as you want, whereas a CD can only be recorded once.

Time to go digital

Sony’s latest sales strategy is to promote the MiniDiscs recording abilities. After all, when the company tried to sell MiniDisc as a CD-replacement, it flopped. Why do you really need a MiniDisc player when you can buy a perfectly decent CD-walkman for less than a hundred bucks?

With more than 160 million CD-players installed in the U.S. alone, Sony knows that it cant compete in that market but it can compete with the aging analog audiocassette tape. The tapes were introduced way back in the sixties and since then have become part of our everyday lives. But the inroads CDs have made against them have severely undercut their position in the market. Sales of blank audiocassettes have been in a decline since 1994, and will decline another 8% in 1998, to $257 million, according to data from Arlington, Va.-based Consumer Electronics Manufacturing Association. In addition, the sales of cassette players are all set to drop 7%, to $246 million, this year.

“The customers who have grown up in the digital era, with computers and the Internet are looking for a digital option to the old-fashioned audiocassette tape,” says Viken. The falling fortunes of audiocassettes have given the MiniDisc a chance to stage a comeback, and now it all depends on MiniDisc makers to capitalize on the opportunity.

Analysts think that the only way the MiniDisc can catch on is if companies reduce the price of the hardware down to the levels of a high-end Walkman or a cassette deck, and at the same time bring down the price of blank MDs to that of the cassette level.

Right now blank MiniDiscs cost anywhere between $4 to $10 a disc, while players start at $200 and can go as high as $800 for the home recording units.

Viken admits that price has been a barrier to the success of the MiniDisc in this country, and adds that for its part Sony would continue to bring down prices and try to make it even more affordable.

Hopefully these price cuts will allow Sony alone to sell half-a-million units in the U.S. in 1998. Worldwide 1998 sales of MiniDisc hardware will reach 6.3 million units and sales of blank discs will hit 60 million, while Sharp estimates 4.7 million units (one million in markets other than Japan) for hardware and 50 million for blank discs. Strategy Analytics, a U.K.-based market research firm, predicts shipments of 2 million units to the U.S. in the year 2000 and 19.5 million units by the year 2005.

But none of this will make a blind bit of difference unless the recording industry is able to provide music that can be played on MDs. Sony, through its recording arm, has the potential to cross-pollinate and already has begun to market some of its top talent in MD format but nowhere near its entire list. And none of the other companies are willing to touch it with a barge pole–yet. To make a go of it, and really put its money where its mouth is, Sony has to start manufacturing and marketing its list–its entire list–on MDs. If it doesnt, recording potential alone wont cut it on the American market. Forget the good technology and the heavy promotional budget–that’s the bottom line. Americans like their music but they also like their convenience just as much. If you dont give them a wide selection of pre-recorded music, you might as well put the MD up on the shelf with the 8-track and the Betamax and turn on the radio.